Login

IRM Energy gears up to sell gas in Banaskantha

Vol 19, PW 23 (28 Jul 16) Midstream & Downstream

Ahmedabad-based pharmaceuticals giant Cadila - which has diversified into the gas sector through IRM Energy - is wasting no time after receiving PNGRB authorisation for Banaskantha in Gujarat on July 20.

IRM is talking to both GAIL and GSPC about sourcing gas (most likely R-LNG) to supply factories and businesses, according to a company source. For gas to homes it will source from GAIL at $3.06/mmbtu in line with government policy in place since October 2014 which gives the CGD sector priority for domestic gas allocations.

IRM has submitted a Rs62.06cr ($9.33m) performance bank guarantee to the PNGRB for the area beating Gujarat Gas and Sabarmati Gas, both GSPC group companies. A senior Cadila source says IRM needs to complete financial closure before sourcing gas so it can meet the PNGRB's target to begin pipeline-laying before January 15, 2017.

Agricultural and dairy producers in Banaskantha such as the Banas dairy which sells milk under the Amul brand are among its targets for gas sales. "Banas dairy still uses coal in its boilers," we hear.

Also targeted are local potato chip and wafer producers - potatoes from the fields in and around Banaskantha supply over 1bn kg every year to US fast-food giant McDonalds. According to Gujarat Gas total Banaskantha demand stands at 1.03m cm/d: 440,000 cm/d for factories, 330,000 cm/d as CNG, 220,000 cm/d for households and 40,000 cm/d for businesses.

Food producers potentially interested in gas from IRM include Adarsh Derivatives, Gujarat Agro Industries, Kishan Agro Industries and Royal Proteins. Cement factories who might be interested include Balaram Cement, Sri Ram Cement and Jagdamba Cement. Also targetted are 104 small diamond cutting and polishing units, 60 marble processing units and more than 350 textile factories. Under the 5-year minimum work programme, IRM must lay a total 1800-inch km of pipeline and connect 1401 households. It must lay 360-inch km in the first year rising to 900-inch km in the second year, 1440-inch km in the third year, 1620-inch km in the fourth year and 1800-inch km in the fifth year. It must connect 210 households in the first two years, rising to 701 houses by year-three, 981 by year-four and 1401 by year-five. Expect Banaskantha district to develop quickly in the coming years as it lies within the remit of a $90bn infrastructure project backed by the Japanese government - the 1453-km Delhi to Mumbai Industrial Corridor.

Food producers potentially interested in gas from IRM include Adarsh Derivatives, Gujarat Agro Industries, Kishan Agro Industries and Royal Proteins. Cement factories who might be interested include Balaram Cement, Sri Ram Cement and Jagdamba Cement. Also targetted are 104 small diamond cutting and polishing units, 60 marble processing units and more than 350 textile factories. Under the 5-year minimum work programme, IRM must lay a total 1800-inch km of pipeline and connect 1401 households. It must lay 360-inch km in the first year rising to 900-inch km in the second year, 1440-inch km in the third year, 1620-inch km in the fourth year and 1800-inch km in the fifth year. It must connect 210 households in the first two years, rising to 701 houses by year-three, 981 by year-four and 1401 by year-five. Expect Banaskantha district to develop quickly in the coming years as it lies within the remit of a $90bn infrastructure project backed by the Japanese government - the 1453-km Delhi to Mumbai Industrial Corridor.